Strategic Planning: A Necessity in Today's Environment

by Joel A. Rose

The difference between a financially successful and a marginally successful law firm may very often be traced to how well the combination of its leadership/governance (policy determination and implementation), culture, partner compensation system, and client base brings out the energies and talents of its attorneys.

While the success of many firms has resulted initially from the energy, skill and reputations of founding- and second-generation partners, at some point, the firm must establish an identity that transcends these partners and attracts clients because of its special capabilities.

Firms that position themselves through strategic planning are simply operating like any well-run business in an intensely competitive market. The strategic planning process, if well-conceived and implemented, will foster communication, input and a sense of ownership and common direction that will bind the firm, help it withstands adversity, achieve longevity and success, and build "emotional equity," as opposed to financial equity.

The strategic planning process allows firms to re-focus on team work and investment in the long-run, even though this investment may reduce short-run profits.

Firms must recognize that they cannot build a long-term continuous stream of business in one year. Law firms are not static. Internal and external forces change law firms, i.e., the additions and departures of key clients and influential partners, economic trends and public policy, etc.

The "glue" that holds partners together includes their agreement about those collective values and beliefs about client service; an understanding and commitment about the firm's mission, direction and goals, and partner compensation levels that are competitive with those of their counterparts in peer firms.

Planning for Planning

The firm's management and partners must be committed to strategic planning and its implementation. Without this commitment, the strategic planning process will be unsuccessful. For the strategic planning process to be successful, lawyer management should do the following:

Set the tone and methodology to encourage communications and participation from all attorneys;

Determine what the strategic planning process should be, even if the goal is as simple as getting all partners together for a weekend retreat for fun and interaction that reminds them why they are practicing law together;

Have the "will" and obtain the collective support of the partners to hold them accountable for their actions/inactions relating to developing and implementing strategic plans for the firm, their practice areas and themselves;

Decide whether to take a "top-down," i.e., lawyer management performs strategic planning with input from the lawyers, or a "bottoms-up" approach for strategic planning, i.e., each practice area develops plans, with the firm's strategic plan being the cumulative input from all of the various departments and offices. In the latter, department heads and practice group leaders, together with members of their departments/practice groups meet and set realistic and achievable goals, given the expertise, personnel, personalities and level of business in the firm.

Strategic issues to be addressed during the strategic planning retreat:

The firm's culture;

The firm's governance and management;

The firm's compensation system, i.e., does it encourage /discourage partners to perform whose activities to address the firm's immediate and longer term needs;

The firm's competitive position in its marketplace;

Those strategies and action plans to be implemented by the firm, its practice areas and attorneys to achieve the desired objectives;

Reach a consensus of the partners about the process to ensure implementation of the plans, assess the results and to administer corrective actions, as required.

Many law firms have found that experienced law office consultants can expedite the strategic planning process. Being familiar with lawyer dynamics and the economics of law firms, they can analyze and interpret financial and management information and partners' responses. They can recommend alternative approaches for achieving firm objectives. Further, partners are usually willing to discuss their perceptions about the firm and respond to questions more readily with consultants than with other partners.

Objectives for Presentation

The next phase includes drafting objectives for presentation to the partners in each of the areas studied. To illustrate, the following is an abbreviated presentation of marketing plan objectives and strategies prepared for a mid-size law firm.

"We will be the dominant and pre-eminent full-service law firm of first choice in the region, with a statewide reputation for competence and professionalism of the highest order."

The firm then would have to establish goals to achieve the objective, such as thefollowing:

Goal 1: Create, implement and promote a streamline governance system that enjoys the confidence of everyone and allows us to anticipate and benefit from changes in the environment through prompt, skilled and coordinated decision-making and action.

Goal 2: Systematically recruit, retain and train high-caliber attorneys, who will be successors and leaders for our firm.

Goal 3: Systematically recruit, retain and train high-quality staff, who will have universal knowledge and skills to serve flexibly in various functions.

Goal 4: Adopt and implement a formal, coordinated staff feedback system, which will be used in a positive way to provide input and increase accountability.

Goal 5: Develop and implement attorney and staff career-development systems that emphasize personal and collective responsibility and reflect a shared intensity and dedication.

Goal 6: Implement a client-feedback system to provide input and increase accountability, assisting us in being the best service provider of any type used by our clients.

Goal 7: Identify and develop plans for new specializations so that we will fully serve our clients.

Goal 8: Identify, develop and expand strategic relationships with client, business and professional groups.

Implementation

The payoff for the strategic planning process is in the implementation of the plan. This is frequently the most difficult part of the process. It is recommended that the plan be implemented through the firm's existing organizational structure, i.e., the managing partner, the strategic planning committee, heads of substantive practice areas and branch offices, as required.

Individual partners should be assigned responsibility and held accountable for the satisfactory implementation of each phase of the plan in accordance with an agreed-upon timetable.

Partners responsible for the implementation phase should report to the managing partner, strategic planning committee or other group designated to oversee the planning process. Problems and/or progress should be reviewed and assessments made to determine the most appropriate strategies to be followed. Status reports should be provided to the other partners in each phase of the plan in order to keep them apprised of the planning activities.

The implementation must be monitored to assess effectiveness, and corrective action must be taken, as required.

Strategic planning is a dynamic process. If conceived properly and implemented effectively, it will provide information required for determining immediate and long-term goals.